Condo market: Bangkok stable, glut in Hua Hin

Real Estate January 17, 2014 00:00

By The Nation

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Bangkok's condominium market has maintained stable growth, but Hua Hin's is suffering from oversupply, according to a survey by property agency Knight Frank Chartered (Thailand).

Managing director Phanom Kanjanathiemthao said it was possible the Bangkok property market had been affected by the political turmoil, as both Thais and foreigners have postponed purchasing decisions. 
He said buyers should exercise caution when venturing into lower-cost condo investments in the city’s outskirts, especially the tail end of Sukhumvit and in Nonthaburi’s Bang Yai district. The markets of the two outer business-district zones of Ratchadaphisek and Paholyothin are more stable at this time.
Meanwhile the Hua Hin market, which consists principally of Thai buyers, has seen a surge of supply in the past two years and thus has slowed down. 
Some projects offer a large number of units, making the overall market stagnant. Competition may be fiercer, but at the same time, buyers also have more choices. 
Both Hua Hin and nearby Cha-am have been affected by developments such as The Energy, which boasts up to 6,000 units – this is the main reason supply has surged way beyond demand. Other developers typically build projects with about 200-300 units only, he said.
Despite this oversupply, prices have not fallen because these condos are mostly new, and not resale units. Also, the developers cannot build if they have to lower prices further. At any rate, they do not want to start a price war to recharge the market.
Under the current political situation, there are not likely to be many new project launches. 
Phanom also noted that development firms that are thinking of entering the Hua Hin market could not find suitable seaside plots or afford the very high prices of such plots that are currently for sale. Developers have thus turned to Khao Tao, but land in that area is lacking adequate public utilities, infrastructure and conveniences such as restaurants.
“As Pattaya and Hua Hin already have a large supply of condominiums, many developers have turned to Khao Yai [in Nakhon Ratchasima province]. If early movers are successful, other developers will follow. If the early developers aren’t successful, they have the option of turning their project into a hotel. 
“We will thus continue to monitor the direction of the market, and whether the number of projects will increase or decrease,” Phanom said.